David Friedman on the Precautionary Principle

In the mid to late 1980s, I used to do 5 or 6 book reviews a year for Fortune magazine. My editor then was the late Dan Seligman, a legend at Fortune. He was the most economically literate journalist I had met until that time. And since then, I still haven't met anyone quite as good.

He is also the person who, more than anyone else with the possible exception of my wife, taught me how to write well.

Dan published about 85% of the reviews I sent him. Unfortunately, one he didn't publish was my review of David Friedman's 2nd edition of The Machinery of Freedom. I've forgotten why; my vague recall is that he thought the subject wouldn't interest enough of his readers. When Dan and I were reminiscing in the early 1990s, he told me his biggest mistake with me was not publishing my review of Barbara Branden's The Passion of Ayn Rand. His reason: he later realized just how many Fortune readers were interested in Ayn Rand. I replied that his biggest mistake was not publishing my review of Richard Epstein's Takings and his second biggest mistake was not publishing my review of David Friedman's Machinery.

I remembered all this this morning when I checked out David Friedman's blog and noticed that he is posting some new chapters for his 3rd edition of Machinery. The one I read is excellent. It's titled "The Conservative Mistake." The chapter is very short: you can probably read and grok it in 2 minutes or less. One highlight is his discussion of the Precautionary Principle, which, like so much of David's writing, hits the nail on the head with only a few words. It's actually better than the discussion by Aaron and Adam Wildavsky in "Risk and Safety," in The Concise Encyclopedia of Economics.

Here's David:

The left wing version of the conservative mistake comes with its own pseudoscientific slogan, "the precautionary principle." It is the rule that no decision should be made unless one can be confident that it will not have substantial bad effects, that the lack of any good reason to believe it will have such effects is not enough. At first glance it sounds plausible, but a moment's thought should convince you that it is internally incoherent. The decision to permit nuclear power could have substantial bad effects. The decision not to permit nuclear power could also have substantial bad effects. If one takes the precautionary principle seriously, one is obligated to neither permit nor forbid nuclear power and similarly with many other choices, including acting or not acting to prevent global warming.

By the way, David posts his chapters so that he'll get feedback. Obviously I like the chapter a lot. My one nit-picky piece of feedback is that in the third paragraph, the sentence, "The first is that human habitability is limited mostly by cold not heat" should have a comma after "cold."

P.S. In looking at my earlier post on Seligman, I noticed that I promised to tell my story about first writing for him. The body blow I took from his first edit was one big step on my path to good writing. I'll tell the story sometime in December.

While Friedman makes several good points, he also makes some mistakes, in my estimation.

1) He asks why change is presumptively bad. The main reason it is presumptively bad is because change itself takes effort to accommodate, whether or not the end result is good or bad. That's why constant changes in regulation are a bad thing, regardless of whether the regulation improves or worsens. Similarly, a change in climate will harm us in certain ways just because we have built much of our infrastructure based on the current climate. The long run effects are important too, but we should take into account that any change is likely to be detrimental in the short run.

And his argument that climate has changed many times over the last million years isn't a very good argument against avoiding a dramatic change over 100 years.

2) The precautionary principle. The fact that this principle could result in both building and not building nuclear plants doesn't mean the principle is wrong; only that we should take a more nuanced view than is usual. I agree that the Left often does a poor job of looking at both sides of most issues, but that doesn't mean a more analytical version of the same principle is not in order.

Like Mark V. Anderson, I have some problems with Friedman's account of change and the conservative "mistake."

The simplest way to look at this issue is through game theory. Rational players will settle on the Nash equilibrium, which is a strategy in which no player can unilaterally do better. Stated differently, this means that rational players don't change unless the benefits are likely to exceed the costs. This is a fundamentally conservative position, yes, but it's a also a fundamentally rational one for the reason Mark V. Anderson points out--change itself is costly.

There's a second reason why the conservative principle (not mistake) is almost always the right approach. In a largely free society unroiled by dramatic change, the market will have settled near or at a local equilibrium. It is almost certain that changing from that strategy will make things worse, because the set of lower payoffs is much larger than the set of higher ones.

Friedman is right, of course, to note that society never stands still: Change of some kind is inevitable. But even so, changes of strategy can only be rationally justified if the benefits outweigh the costs under the new anticipated conditions.

I carried my copy of Machinery of Freedom wherever I moved until I settled down. By the time I passed in to my son, it was in tatters. It is a great book, and I'm glad he's adding to it.

The problem with the precautionary principal, in regards to climate change, is simply that the cost of totally abandoning carbon fuels is also a dramatic change. And in order to prevent a significant increase in temperature, we will have to totally abandon carbon based fuels.

It is the rule that no decision should be made unless one can be confident that it will not have substantial bad effects,

This seems to be a principle that is only applied when it comes to new technologies, because they definitely don't use it when it comes to new social welfare programs.

The left is happy to cause substantial bad effects to 3% of the population, if they think it will provide improved healthcare to another 15%.
But they are happy to deprive 15% of the population of a life-saving new technology, if it has bad effects for 3%.

I find it worth noting that when a new technology has very visible benefits then most people figure the precautionary principle can go take a hike - fears about cellphones' emfs have stopped very few people from using them. Actual activism has focused on cell sites' locations, which has a less visible link to the benefits.

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